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Makwetu: AG not responsible for uncovering state capture

Jun 13 2017 20:31
Liesl Peyper

Cape Town – It is not the job of the auditor general to uncover or report on state capture, but rather to ask uncomfortable questions if there are indications of wrongdoing, said Auditor General Kimi Makwetu on Tuesday.

Speaking at a lunch hosted by the Cape Town Press Club about the work his office is doing, Makwetu pointed out that the revelations of state capture that has been in the public domain of late is not due to his office “missing something” when doing audits at state departments and state-owned entities.

“If you look at the cycle of control – whether it’s at a state department or a state-owned entity – all of these controls start with the people who are charged with governing these institutions,” Makwetu said.

READ: NEC has known about state capture since 2012 - analyst 

“These things are complex and often even the people in finance are none the wiser about the existence of a particular contract as it never filters down to the organisation.”

Makwetu said auditors are aware of whether people in a particular organisation are open and ready to come forward when they are suspicious about the existence of fraud and errors.

“One of the things we do is to interview the chair of the board, or the CEO and CFO and ask direct questions about how they have become aware of wrongdoing and fraud,” Makwetu said.

It is unlikely that all instances of fraud and wrongdoing will be uncovered, especially in the sample selection of audits done. “Even if we pick up two or three instances in a population of 1 000 issues we won’t immediately say, ‘This is an isolated situation’,” Makwetu explained.

READ: ANC seeks quick process on state capture probe 

His office will rather point out that such instances are typical of an environment in which there are no proper controls.

Makwetu said the “first line of defence” in any organisation are the leadership and management and whether they’ve put in place systems that enable them to deal with fraud and mismanagement.

“The auditor’s job is to say we want to caution you that you’re heading down a slippery path. Unfortunately an audit is only done at the tail-end and not at the point when contracts are being concluded.”

However, when his office hears about behaviour that is inconsistent with good practice it is factored in when the audit is done. “But we won’t go straight in and look for something [such as state capture],” Makwetu said.

READ: Only one SOE achieves clean audit 

“Something like that will very seldom find its way into the accounting records, and we won’t find it – even if it is a super-charged audit that means we go into a specific institution on a daily basis – we still won’t find it. There will be someone in marketing who colludes with someone in finance. You won’t find it.” 

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kimi makwetu  |  state capture  |  auditor general

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